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Five New Year's resolutions to get workplace relations back on track

By John Slater - posted Friday, 6 January 2017

2016 saw the coalition government tally up a number of modest wins on the industrial relations front. The abolition of the anti-small business Road Safety Remuneration Tribunal and passage of the Registered Organisations Bill and ABCC were important steps towards returning fair competition to sectors of our economy stymied by a lack of competition and rent seeking. But with potentially only two years left before a Shorten Labor Government takes the reigns and barely any discernible industrial relations agenda, a healthy dose of New Year's introspection could not come too soon.

With talk that a below-trend growth and lagging productivity could well be the new norm, Turnbull needs to strike while the iron is hot.

Here are five ways the Coalition could get started.


Give BOOT the BOOT

The Fair Work Act's requirement that all employees be 'better off overall' under any proposed enterprise agreement as opposed to the award sounds like a well-intentioned safeguard to prevent employees being short-changed. In practice, the so-called 'BOOT test' has proven to undermine the core purpose behind enterprise bargaining's introduction – encouraging productive and flexible work arrangements that meet individual employee and employer needs.

The problem lies in the fact that the BOOT test has been strictly applied to mean every single employee covered must be 'better off overall' under any proposed deviation from the award. For example, an agreement that trades a higher base rate of pay for reduced overtime or weekend loadings will not pass muster if 1 per cent of workers are not left better off based on their work schedules, irrespective of the other 99.

For retail and food chains open long hours, this is an impossible standard to meet. So much was confirmed by last year's revelations that Coles and McDonalds enterprise agreements covering hundreds of thousands of workers did not pass the BOOT because some workers, typically those who only worked weekends or late night shifts, were not left financially better off.

Judith Sloan and other commentators have noted that the requirement that the BOOT must fit all, even in a workforce as large and disperse as Coles is likely to see a return to awards as the dominant mode of pay setting. In other words, without action we are likely to see a future labour market more regulated than the two decades just passed.

Giving the 'better off overall' test the boot and returning to the Howard era 'no disadvantage' test would give some much-needed life support to an enterprise bargaining system at risk of going the way of the woolly-mammoth.


This would herald the return of the more flexible approach of weighing the benefits of the award against the proposed agreement to ensure that, overall – not individually in every conceivable circumstances – employees were not worse off. The benefits of this macro approach to enterprise agreements would be shared by employees enjoying on the whole better wages and conditions and businesses freed from the straightjacket of the award system.

Public sector pay freeze

It's a little known secret that Australia's public servants are paid more and work less than their private sector counterparts. As research from the IPA's Aaron Lane has found the average public servant brings home nearly $8,000 more than their private sector peers. Add to this perks like overgenerous leave entitlements and beefed up super contributions and there's no doubt our public service are living large.

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About the Author

John Slater is a student and an intern at the Cato Institute.

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All articles by John Slater

Creative Commons LicenseThis work is licensed under a Creative Commons License.

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